Intel Corporation (NASDAQ:INTC) had been in a world of hurt for 2015 much before the recent turmoil in the broader stock market. Semiconductors like INTC tend to have leading indicator qualities to the direction of the broader stock market, and that has played out this year.
The selloff in Intel stock, however, now has a well-defined area of support where investors would find a good medium- to longer-term buying opportunity, while active investors can trade both the long and short side at defined layers of resistance in the closer-up time frames.
When INTC reported its latest quarterly results in July, Intel stock jumped intraday … but that jump also marked another lower high and finally led to another two legs lower.
Intel stock saw good price appreciation from 2012 into late 2014 on the back of better demand for PCs, which was also reflected in shares of other ‘older’ technology firms such as Microsoft Corporation (NASDAQ:MSFT) and Hewlett-Packard Company (NYSE:HPQ). As momentum in the PC upgrade cycle slowed, however, so too did the price appreciation of INTC.
Focus for Intel stock investors then switched to other areas, such as the move into chips to support the mobile technology industry and most lately a focus on chips to support drone technology.
Intel Stock Charts
Looking at the multiyear price chart of Intel stock, we see that a major breakout move past long-term horizontal resistance in the high $20s took place in June of last year, which also marked the beginning of what ended up being a large head-and-shoulders pattern with the neckline at the blue horizontal.
With the latest swoosh lower in the stock in late August, this neckline broke and INTC retested its longer-term support line (blue arrow). While an overshooting below this line ultimately is possible, should we encounter another round of selling in the broader stock market this fall, this support line should also serve as a good buying opportunity for medium- to longer-term investors.
Next and closer up on the charts, we see that the slide in Intel stock this year has left behind a series of well-defined areas of technical resistance that traders and active investors can use as reference points.
- First area of resistance: The blue box and yellow 50-day moving average between $28.79 and $29.60.
- Second area of resistance: Horizontal resistance and blue 100 day moving average around $30.60-$31.
- Third and wide area of resistance: Horizontal resistance and red 200-day moving average between $32.50 and $35.
While investors could look to buy Intel stock at the longer-term line of support mentioned above, more active types have these three areas of resistance to a) play the stock from the long side and b) sell short the stock if/when one of these resistance areas marks the chart with a notable bearish reversal day or week.
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Successful trading and investing starts with a plan. Download Serge’s essential trading plan, The Essence of Swing Trading e-book. As of this writing, he did not hold a position in any of the aforementioned securities.
